Cheese is a metaphor for what you want to have in life – whether it is a good job, a loving relationship, money, or spiritual peace of mind. Cheese is what we think will make us happy, and when circumstances take it away, different people deal with change in different ways. Four characters in this delightful parable represent parts of ourselves whenever we are confronted with change. Discover how you can let change work to your advantage and let it lead you to success!

The Maze

Four characters live in a maze and look for cheese to nourish them and make them happy. The maze is where you spend time looking for what you want. It may be the organization you work in, the relationships you have in your life, or the community you live in.

Parts of All of Us

Two of the characters named Sniff and Scurry are mice. They represent parts of us that are simple and instinctive. Hem and Haw are the little people, representing those complex parts of us as human beings. Sometimes we are like Sniff, who anticipates change early by sniffing it out, or Scurry, who quickly scurries into action and adapts. Maybe we are more like Hem, who denies change and resists it out of fear, or Haw, who learns to adapt in time when he sees something better. Whatever part of us we choose, we all share the common need to find our way in the maze of life and succeed in changing times.

Wisdom in a Nutshell from Who Moved My Cheese?

• Anticipate change. • Adapt quickly. • Enjoy change. • Be ready to change quickly, again and again. • Having Cheese makes you happy. • The more important your Cheese is to you, the more you want to hold on to it. • If you do not change, you can become extinct. • Ask yourself “What would I do if I weren’t afraid?” • Smell the Cheese often so you know when it is getting old. • Movement in a new direction helps you find New Cheese. • When you move beyond your fear, you feel free. • Imagining myself enjoying New Cheese, even before I find it, leads me to it. • The quicker you let go of old cheese, the sooner you find New Cheese. • It is safer to search in the maze than remain in a cheeseless situation. • Old beliefs do not lead you to New Cheese. • When you see that you can find and enjoy New Cheese, you change course. • Noticing small changes early helps you adapt to the bigger changes that are to come. • Read the Handwriting on the Wall • Change happens. They keep moving the Cheese. • Move with the Cheese and enjoy it!

The Story Behind the Story

Kenneth Blanchard, Ph.D. relates how the Cheese story has made a difference in the lives of many people all over the world. This simple parable has been credited with saving careers, marriages, and lives! NBC-TV Olympic broadcaster Charlie Jones heard the story and it helped him overcome his anger about being transferred from his usual Track and Field assignment to Swimming and Diving, where he had little experience. He realized his boss had “moved his cheese”, so he adapted, learned the two new sports, and in the process, found that doing something new made him feel young.

His boss soon recognized his new attitude and energy, and gave him better assignments. Charlie went on to enjoy more success and was inducted into the Pro Football Hall of Fame Broadcaster’s Alley.

A Gathering

One sunny Sunday in Chicago, a group of former classmates gathered for lunch to catch up on each other’s lives, having attended their high school reunion the night before. The topic came around to change, and how each person experienced it. Michael tells the group The Story.

Who Moved My Cheese?

Everyday Hem, Haw, Sniff, and Scurry went about their business collecting and eating cheese. Every morning, the mice and little men put on their jogging suits and running shoes, left their homes, and raced around the maze looking for their favorite Cheese.

They each found their own kind of cheese one day at the end of one of the corridors in Cheese Station C. Every morning the mice and men headed over to Cheese Station C and soon they established their own routines.

Sniff and Scurry woke up early everyday, always following the same route. The mice would arrive at the station, tie their running shoes together, and hang them around their necks so they could get to them quickly whenever they needed to.

Hem and Haw followed the same routine for a while, but later on, they awoke a little later each day, dressed slower, and walked to Station C, always assuming there would be Cheese waiting for them. In fact, the little people put away their running shoes, and grew very comfortable in Station C. Later, this over-confidence turned into arrogance.

The mice, on the other hand, always inspected the area, and noticed the Cheese supply was getting smaller every day.

One morning they discovered there was no more cheese. The mice did not overanalyze things, they knew it was coming, so they simply untied their running shoes from their necks and put them on. The mice wasted no time and immediately ventured into the maze in search of New Cheese.

Hem and Haw arrived later, and having taken their Cheese for granted, they were surprised to find there was no more cheese. Hem yelled, “Who moved my Cheese?”

Because the Cheese was so important to them, the two little people spent too much time deciding what to do. They couldn’t believe the Cheese was gone.

After much whining, Haw suggested,MAYBE WE SHOULD JUST STOP ANALYZING THE SITUATION SO MUCHAND JUST GET GOING AND FIND SOME NEW CHEESE.

While Hem and Haw were wasting time fretting over their situation, Sniff and Scurry had already found a great supply of New Cheese at Cheese Station N.

Haw began to imagine himself tasting and enjoying New Cheese. Hem refused to leave Cheese Station C. Haw also began to realize his fear was keeping him from leaving Hem and going back into the maze. He painted a picture in his mind of himself venturing out into the maze and eventually finding New Cheese.

Haw was in the habit of writing thoughts on the wall for Hem to read. Before leaving he wrote, “If you do not change, you become extinct.” Haw would write thoughts like these every now and then as he went about the maze, hoping Hem would venture out of Station C and read the handwriting on the wall.

Haw found a little cheese here and there. As he moved through the maze, he learned several things for himself:

* He needed to let go of his fears. * He realized what lies out there could be a lot better, not worse. * He should be alert in order to anticipate change, and next time, periodically smell the cheese to check if it is getting old.

And to learn these important lessons he had to tell himself:GET OUT OF YOUR COMFORT ZONE.

He found a cheese station but it was empty. He realized that if he had moved sooner, he would have very likely found a good deal of New Cheese here. So he wrote on the wall:

• The quicker you let go of old cheese, the sooner you find New Cheese.

Haw went back to the cheeseless station to offer Hem some bits of Cheese he had picked up along the way. Hem turned it down because he wanted the cheese he was used to. Haw went back into the maze.

Haw soon came to realize:

• The fear you let build up in your mind is worse than the situation that actually exists.

WHAT YOU ARE AFRAID OF IS NEVER AS BAD AS WHAT YOU IMAGINE.

• When you change what you believe, you change what you do.

Haw soon found New Cheese at Station N, and met up with his old friends Sniff and Scurry who looked like they had been there for quite some time because they had grown fat.

Haw reflected as he enjoyed his New Cheese. He realized many more things:

* He had been holding onto the illusion of Old Cheese that was no longer there. * He had started to change as soon as he learned to laugh at his own mistakes, then he was able to let go and move on. * Sniff and Scurry kept life simple. They didn’t overanalyze or overcomplicate things. They simply moved with the Cheese. * The mistakes he made in the past can be used to plan for the future. * Notice the little changes so you are better prepared for the big change that might be coming. * The biggest inhibitor of change lies within your self. Nothing gets better until You change.

THERE IS ALWAYS NEW CHEESE OUT THERE.

While Haw still had a supply of cheese, he often went out and explored new areas in order to stay in touch with what was happening around him. He knew it was safer to be aware of his real choices than to isolate himself in his comfort zone.

A Discussion

Michael finished telling the story and the group of former classmates gathered at a hotel lounge later that evening for drinks. Each one could identify with one of the characters in the story. Nathan pointed out, “Change happens to all of us.” The group talked about how the parable related to the changes in their professional and personal lives.

* Nathan’s retail business suffered from unanticipated change. Their chain of small stores had to compete with mega-stores. These retail giants had huge inventory and low prices, forcing Nathan to close down some of the stores in their chain. * Jessica’s encyclopedia company resisted change when someone suggested they sell their product in disk format. The idea was that disks would be cheaper to update and produce, and would sell for a fraction of the cost of actual hardbound encyclopedias. Jessica’s company didn’t change but their competitor did. Sales fell badly, and her job security became threatened. She may need to go out into the maze and look for New Cheese. * Michael applied the story to his work, asking each person in his organization who they thought they were: Sniff, Scurry, Hem or Haw. He recognized each character type had to be treated differently.

Sniffs could sniff out changes in the marketplace, and update the corporate vision. They identified changes as well as possible new products and services consumers would want.

The Scurrys liked to get things done, so they took action based on the new corporate vision. They only needed to be monitored so they didn’t scurry off in the wrong direction.

The Hems wanted to work in a place that was safe and where the changes made sense to them, turning them into Haws. If they didn’t change, they were eventually fired.

The Haws were hesitant at first, but were open-minded enough to learn something new, and adapted.

* Richard realized how his children had been acting like Hem lately. They were angry and didn’t want to accept the change in their family, since Richard had recently separated from his wife. * Jessica and Cory each recognized it was time for New Cheese in their personal relationships, which could mean getting out of a bad relationship, or adapting new behaviors to save the relationship. * Richard also thought perhaps New Cheese could mean changing the way he behaved on the job rather than completely changing jobs. * Michael concluded that the Cheese parable works best when everyone in the organization knows about it, because an organization can only change when enough people in it change. He added that passing the story on to people they wanted to do business with had proved profitable. They promoted themselves as that client’s New Cheese, which led to new business.

It has been an accepted fact for decades now that 'hits rule'. Popular culture today is consumed by hits-- people can't help but talk about them, select them, and in general try to understand them. Executives from many different industries constantly rack their brains trying to come up with the next big seller.

Yet at the rate things are going, hits are beginning to rule less. Number one may still be number one, but the number ones don't sell as much as they used to. Hits are not the economic force they used to be; markets have fragmented into millions of niches.

The main difference between then and now is that consumers of today have far more choices than ever before. This incredible amount of choice is resonating in a very big way with modern-day consumers; they increasingly favor markets that provide the most choice. A new market is coming to fruition-- a market of multitudes and niche products that, thanks to the Internet and other such sources, is easier and cheaper to reach than ever before.

This book is about that market. It takes a look at niches, which are emerging as the new big market alongside the hits. The massed group of niches has always existed, but thanks to modern-day conditions the cost of reaching this group has fallen dramatically, and as a result it has become a force to be reckoned with.

Why You Need This Book

As the preceding section has shown, the era of 'one-size-fits-all' is over. The expertise gained from decades of experience in creating, picking and promoting hits no longer exists. A new set of resources, one that explains not only how to deal with this situation but to prosper, is vital.

This book is one such resource. In a nutshell, it provides readers with a history of the hit, a definition and short history of the so-called 'Long Tail', a look at the new units of today-- the new market, producers, tastemakers-- as well as a prediction of how tomorrow's Tail might look like.

What’s a 'Long Tail'?

In the course of his research on modern technology trends, author Chris Anderson made an astounding discovery. He was interviewing Robbie Vann-Adibe, the CEO of 'digital jukebox' company Ecast, and he was asked to guess what percentage of the 10,000 albums the company had sold at least one track per quarter. Even his wildest guesses were way off-- the actual figure was an incredible 98 percent. As the company’s executives continued to add albums to its archives-- some hit albums, but more and more of them obscure albums that were far from being popular – it was realizing that despite the fact that less and less of what was being added were hit albums, they sold more and more music the more they added.

Anderson realized that this statistic contained a truth about the economics of entertainment these days. Thanks to the Internet, the concept of limited supply has begun to become obsolete. Just about every product sold on the Internet has almost zero packaging cost and consumers have nearly instant access to them; this runs counter to the old model in which a limited amount of storage or shelf space, airtime or other such factors makes it sensible for retailers to fill them with the titles that might just sell best. This is the era of “unlimited selection.”

When the hard data was graphed, it started out resembling any other demand curve, with a few hits being downloaded a relatively huge number of times at the head of the curve, and with the curve falling off steeply with less popular tracks. But the fascinating thing was that the curve itself never fell to zero. It might approach it near the end of the graph itself, but it would never be exactly zero. Such a curve has a 'tail' section that is very long relative to the head, and is called, as a consequence, a 'long-tailed distribution'. Thus the title of an article based on these findings-- which was later used as a basis for this book.

Scarcity vs. abundanceUnlimited selection is beginning to reveal truths about what consumers want and how they want to get it. Plus, the more they find, the more they like – many of them discover that their taste is not as mainstream as they thought (or were lead to believe) by a hit-obsessed culture, by hit-centric marketing, and/or a plain lack of alternatives.

The problem of traditional retail is what is termed as the “tyranny of locality.” We live in the physical world, and until recently most of our entertainment media was located in it as well-- and was thus saddled with the need to find local audiences. For instance an average record store needs to sell at least four copies of a CD a year to make it worth carrying, as that is approximately the rent for the half-inch of shelf space the disc needs to be displayed. But distance of course plays a factor - it's unrealistic to expect buyers from a hundred miles away to make their way to one's store to buy a CD. So traditional retailers are forced to play to a local audience and make the decision based on what they think those people might like.

Physics is another physical constraint. Radio frequencies can carry only so many radio stations, and TV frequencies only so many TV channels. Plus TV and radio stations can only show a limited number of shows a day (and that does not even take prime time into consideration). So a focus on hits-- what is popular, what might sell-- is understandable in a world of scarcity.

However, most of us want more than just what is popular; everyone's taste is non-mainstream at some point. The problem is-- or used to be --finding the products to satisfy one's non-mainstream demands.

Enter, then, the new world of abundance. New technologies have made it ever more possible for retailers on the net to stock a variety of goods that is far, far wider than the amount any traditional retailer could ever hope to stock (and remain competitive in terms of pricing).

A Brief History of the Long Tail: Expansions in Variety

Given the earlier discussion it might be very easy to assume that the Long Tail is an Internet phenomenon. Actually, it is the culmination of a series of business innovations that date back more than a hundred years.

The true roots of the Tail are in the giant centralized warehouses in the American Midwest of the late 19th century – and with two entrepreneurs named Richard Sears and Alvah Roebuck. These two men came up with many innovations that are noteworthy even today.

They took advantage of the enormous capacity of these warehouses by coming up with a revolutionary system of catalog distribution, which they distributed to customers from all over.

The catalog itself, or ‘Wish Book’, in company parlance, astonishes even now, both in terms of the variety of goods available (mind-blowing for the rural families Sears and Roebuck targeted) and the price savings (often 50 percent or more compared to the stores of the time, even after shipping).

Another innovation was viral marketing. In 1905 the company asked its best customers in Iowa to distribute twenty-four catalogs among friends and neighbors, and offered incentives to the original customers if their friends would also become customers.

They also had a group of suppliers ship goods straight from their factories.

Sears managers set up a system in which each order was allotted a specific time to be shipped, and which made use of a series of pulleys and levers to make sure the orders were moved precisely.

With the advent of affordable cars and better roads, Sears was forced to invent the superstore, which offered huge selection and low prices – far lower than those of traditional merchants.

The next big step was in the food market – the supermarket. The very first one was called King Kullen and it opened in Queens, New York, on August 4, 1930. It offered a staggering variety of products – over one thousand, and this in the depths of the Great Depression. But the supermarket could not have made it big without some other innovations, shopping carts, the automobile, refrigerators and free parking lots among them.

In 1967, toll-free 800 numberswere introduced to help combat an anticipated shortage of telephone company operators. This, though, had an unexpected fringe benefit – it brought about the return of catalog shopping. And the time was ripe – a newly materialistic and affluent suburban generation was ready to spend again, and they were armed with credit cards to boot. This time, though, it was more about targeted niches instead of centralized warehouses carrying massive amounts of just about everything.

As impressive as these new series of catalogs was, what the personal computer could offer would soon put it in the shade. In the early 1990s, e-commerce built on the catalog model and improved on it immensely. It offered an even wider range of selections at a lower cost (no printing and mailing required), had a broader reach, and was far more convenient to order as well. Today, online shopping now accounts for about 5 percent of American retail spending and is growing at an incredible 25 percent a year.

Six Themes of the Long Tail Age

Six themes of the Long Tail age can now be determined:

In just about all markets, there are far more niche goods than hits.

The cost of reaching these niches is falling dramatically, such that it’s possible to offer a massively expanded variety of products.

Potential customers, however, have to be helped to find these niches; a range of tools and techniques – ‘filters’ – can help.

When the variety has been expanded and the filters are in place, the demand curve flattens – the hits are less popular and the niches more so.

All the niches add up; there are so many niche products that as a group they can rival the hits.

As a result, the natural shape of demand is revealed, without the scarcity of information and shelf space and the distribution bottlenecks of the past.

The bottom line is that the Long Tail is culture unfilteredby economic scarcity.

Three Forces of the Long Tail

None of the developments discussed in the six themes can take place without a reduction in the cost of reaching a niche. For this to happen, one or more of the following forces have to come into play:

The tools of production have to become democratized. The personal computer is of course the best possible example. Millions of people can now do what only professional filmmakers or writers, for example, could do just a few years ago. The result is that the available variety of content is growing faster than ever before.

The costs of consumption have to be cut by democratizing distribution. The first force is only really meaningful if others can enjoy it – if they can reach it or find it. The Internet, for instance, makes it easy to reach more people – democratized distribution par excellance.

Supply and demand have to be connected. Consumers must find out about these newly available goods in order for the whole system to work. Demand must be driven down the tail.

All this will be explained in depth in succeeding chapters.

The New Producers

The arrival of simple, cheap technology and services has revolutionized many an industry, from publishing to pop music and beyond.

The result, therefore, is that we are shifting from becoming passive consumers to active producers. The means of production have spread so widely and to so many people that, taken as a group, they are a force to be reckoned with.

As an example, Wikipedia, which makes use of an open collective model, draws on the insights of thousands of people to correct one of the greatest flaws of compiled references– the fact that they begin to age from the moment they are printed. And it does so in an organic, almost self-healing manner, almost as if it were alive. It is maintained not by a small group of experts, but by just about everyone who can add the most comprehensive system of its sort. Plus, in stark contrast to its printed competition, it can be almost infinite in length. In short, in Long Tail terms, it has all the hits and an enormous number of niches.

It’s also important to consider this: up at the head of the curve, business considerations hold more weight, but near its tail, such considerations are secondary. People create for other reasons than to make money – expression, fun, experimentation and so on – and reputation matters as well. So it can be said that one single economic model cannot be used to describe the Tail.

The New Markets

Long Tail “aggregators” are companies or services that collect enormous varieties of goods and make them easy to find. Going by the explanation a couple of chapters ago, they are a manifestation of the second force– they democratize distribution. They act to lower the barriers to market entry; they allow more and more things to find their proper audience. Good examples are Google, which aggregates the Long Tail of advertising, iTunes, which does the same for music, and EBay, which puts together a Long Tail of physical goods and the people who sell them.

Aggregators are not even limited to just selling, though. Even software such as Bloglines that collect RSS feeds are also aggregators, since they coherently order the Long Tail of online content.

For the most part, business aggregators fall into five categories:

Physical goods (Amazon, EBay)

Digital goods (iTunes, iFilm)

Advertising/services (Google, Craigslist)

Information (Wikipedia, Google)

Communities/user-created content (MySpace, Bloglines)

Many aggregators, though, occupy more than just one category, like Amazon and Google.

A distinction must be made between companies that sell physical goods online (so-called ‘hybrid’ retailers that combine the physical and digital dimensions) and those that sell digital goods online– they are both Long Tail operations, but the second one can extend further down the Tail than the first, because of the inherent limitations of physical goods. They have to be stored somewhere, for instance, and storage space always has its limits– not a problem for purely digital wares.

The New Tastemakers

Radio and MTV used to be the only successful ways hit albums could be made. Nowadays, though, music moguls are realizing that the key to making hit albums lies online – and, moreover, in our own hands. Faith in traditional institutions has been waning for quite a while now, and peers are trusting peers more and more. Some people act as individuals, others are parts of groups organized around shared interests, and yet others are simply herds of consumers.

Amplified word of mouth, as was explained a few chapters back, is the manifestation of the third force of the Long Tail – tapping consumer sentiment to link supply and demand. It is those people with good reputations and whose opinions are respected that are the new tastemakers. When this force kicks in, the power of the Long Tail is unleashed.

Given the vast amount of information that is out there, even in Long Tails themselves – not all of which might be valuable to one, or even truthful to begin with, for that matter – most people turn to filters to help screen out what is not needed or wanted. They help people move from the world they know (the ‘hits’) to the world they don’t (the ‘niches’) via a route that they themselves can determine and adjust.

Long Tail Economics

Now let’s take a look at the economics that underpins Long Tails. Long Tails are members of a special sort of curve known as a powerlaw -- a curve whose amplitude, as has already been discussed, approaches (but never equals) zero as the curve stretches out to infinity. In sales terms, then, Long Tails are powerlaws that aren’t cut off by distribution bottlenecks like availability of channels or shelf space.

Powerlaws need variety, inequality(some products have some more of some quality than others) and network effects that amplify quality differences (e.g. word of mouth) to come into existence.

A long-established rule known as the 80/20 Rule is often used to explain how a minority can have disproportionate impact on a whole. For instance, this rule is often cited when 20 percent of products account for 80 percent of revenues. The 80/20 Rule is often misinterpreted as an invitation to carry only the 20 percent of goods that could amount for the most sales. However, the real Rule simply acknowledges that some things will always sell better than others – Long Tails definitely do not contradict this.

The 80/20 Rule changes in three ways in Long Tail markets:

Many more products can be offered compared to traditional markets.

Because it is so much easier to find goods, sales are more evenly distributed between hits and niches.

Because of this, profits are to be found at all levels, not just at the hit level.

Some more points:

The primary effect of Long Tails is to shift consumers’ taste towards niches, but since they are more satisfied by what they find (thanks to filters) they end up consuming more of it than they would in a non-Long Tail sector.

As you travel down the Tail, prices may or may not change; in ‘need’ markets, whose customers know what they are looking for and cannot find it anywhere but online, prices are bound to be relatively inflexible. Prices would be much more dynamic in ‘want markets’ where people can be encouraged to try something new for the right price.

Long Tails are made of many mini-Tails. The big powerlaw curve of, for instance, music is really just the superposition of all the little powerlaw curves formed by each genre.

The Short Head

Whether we like it or not, hits and retail stores are here to stay. The instant-gratification convenience aside, we are a gregarious species and for most of us there is safety in numbers. This means that in Long Tail markets, although the niches still are very much more popular than in regular markets, there still are hits.

The way a modern-day store is structured today caters very much to the hits and to those seeking them out. One need not look further than the shelf in a supermarket to be able to understand the advantages and disadvantages of this sort of system. Supermarket shelves of today are enormous and, thanks to decades of research, arranged precisely so that the eye-level areas are pricier areas for goods than the other ones.

However, as previous sections have shown, such a system has distinct disadvantages vis-à-vis online stores:

They are quite costly for retailers to sell in.

Physical space is severely limited.

It would be quite impossible to try to cater to each customer based on his or her preferences – quite unlike the better websites, for instance, which are easily customizable according to what the customer wants.

Physical stores are crippled by geography – they have to try to sell to local buyers and not to those far away.

Lastly, the limitations of such a system force retailers into categorizing their goods crudely, as an examination of any large department store will show.

The Paradise of Choice

Consumers of today are in the midst of the biggest explosion of variety in history. The overwhelming reality of this age is that literally everything is available to anyone, on a scale unimaginable just a decade or so ago. The question is – does anyone need this much choice? Can we handle it?

Some have said that too much choice is not only bad, it is downright oppressive, and the findings of some appear to bear this out. In one test, customers who were asked to choose from two selections (one with a much wider variety than the other) of jam, tended to buy from the smaller selection instead of the larger one.

As it happens, though, an even newer study determined that people do want choice, and a lot of it. The solution to the problem outlined above is not to limit choice, but order it so it does not become oppressive. In other words, customers like having variety and they want to be helped to choose – but they do not want to feel that the decision is being forced on them.

As compared to brick and mortar stores where the goods just sit there and where, barring the help of store personnel (who may not know any better), the consumer is on his or her own, online shops give their consumers far more tools with which to make more informed decisions. It is not that the supermarkets don’t have the information; it is simply that there is no effective way to get it out to the consumers.

There is a general presumption that more variety leads to more sales. However, the numbers do not show that this is the case; for instance, music sales have dropped since Apple’s iconic iPod was released thanks to the ability of consumers to rip friends’ CDs and download and share tracks using peer-to-peer services. Digital distribution, however, has both widened the field of possible consumers and shortened search time – both undoubted benefits.

Niche Culture

As the Long Tail is about infinite choice thanks to abundant, cheap distribution, the audience tends to distribute as widely as the choice. Once people shift their attention online, they scatter– infinite choice leads to fragmentation. When mass culture breaks apart, it turns into millions of micro-cultures that interact in many baffling and strange ways.

In short, this marks a pivotal shift from mass culture to massively parallel culture. Each of us belongs now to many different groups simultaneously, sometimes overlapping, sometimes not.

This does not mean, of course, that there will be a wholesale shift to an all-amateur culture; it simply means that, as was mentioned before, the hits become less popular and the niches become less obscure. The news industry probably is the one that is showing how things are going to be in the future. Blogs are competing cheek by jowl with established news companies’ websites – and in some cases are out-competing them in terms of incoming links coming from other sites.

The vast range of all that is available to us nowadays can and should be used to make sure that our cultural perspectives are widened. Nothing on the net is authoritative, so it is up to us consumers to consult enough sources to enable us to make up our own minds. Plus this has implications for those we choose to associate with and how. Rather than being loosely connected with people thanks to superficial mass-culture overlaps, we can now be more strongly tied to people with whom we share much more in common. We will still share our culture with others – but not with everyone.

Long Tail Rules

So what’s the secret to creating a successful Long Tail business? It can be summarized in two steps:

Make everything available.

Help me find it.

The first is far easier said than done, especially when it comes to music and film. Rights management and issues make it very tough for music and film to be made available very easily (although advances have been and doubtlessly will continue to be made in this arena).

Developments regarding the second step are proceeding far more rapidly, what with all the developments online.

Here are nine rules of successful Long Tail aggregators:

Move inventory way in… Or way out. Either use digital inventory, or store your goods in partners’ warehouses – this will lower costs and simplify operations immensely.

Let customers do the work. Let them take care of coming up with reviews for your goods (this is termed as ‘crowdsourcing’). Customers can usually do a better job; reviews submitted by users are often well-informed, articulate and, very importantly, trusted by other users.

One distribution method doesn’t fit all. Some people prefer to shop online, others from the privacy and comfort of their own homes. Some want their goods immediately, others prefer to wait. If retailers focus on just one group they risk losing the others. Multiple distribution channels are the only way to reach the biggest potential markets.

One product doesn’t fit all, either. The winning strategy now is to separate content into its separate parts – to ‘microchunk’ it – so that people can consume it however they want to, as well as remix it to create something new. Newspapers, for instance, are microchunked into individual articles, which are used by other sites to concoct more focused product out of this content.

One price doesn’t fit all. In markets with room for abundant variety, variable pricing can be a powerful technique to maximize a product’s value and the market’s size. iTunes, for instance, which sells songs for $0.99, will sell music at a lower price if an entire album is purchased.

Share information. The availability of information is what can make or break an entire operation. Of course it needs to be presented in a way that helps order choice, not confuse customers.

Think ‘and,’ not ‘or.’ One of the symptoms of scarcity thinking is assuming that markets are zero-sum – that everything is an either/or choice. In markets with infinite capacity, however, the strategy is to offer it all.

Trust the market to do your job. In abundant markets you can simply throw everything out there and let the market sort it all out. Measure and respond – don’t predict.

Understand the power of free. One of the most powerful features of digital markets is that they put ‘free’ within reach – their costs are near zero, and their prices can be this way too.

You have the idea of a lifetime and yet you do not know where and how to begin. It is a dilemma shared by entrepreneurs everywhere - what does it take to turn a great idea into action?

Author Guy Kawasaki brings two decades of business experience to offer a definitive guide for anyone who dreams of starting anything. Whether you are thinking of starting a start-up Internet operation or a church group, The Art of the Start will provide you with everything you need to know from raising money to fostering a community.

Chapter 1: The Art of Starting

There are five important things an entrepreneur must accomplish:

Make Meaning. The best reason to start an organization is to make meaning. Meaning is not about money, fame or power. Instead, meaning is about making the world a better place, increasing the quality of life, righting a wrong and preventing good from ending.

Make Mantra. Instead of a mission statement, take your meaning and make your own mantra. A mantra is defined as a sacred verbal formula repeated in prayer, meditation, or incantations such as an invocation of god or a magic spell. Examples of mantras include Disney’s “Fun family entertainment”, and Nike’s “Authentic athletic performance.”

Get Going. Start creating your product or service and commence delivering to your customers. Forget about writing long business plans or creating complicated financial projections. Instead build your prototype and launch your website.

Define Your Business Model. Define your customers and their needs. Come up with a sales mechanism that will earn you more money than what you are spending.

Weave a Mat (Milestones, Assumptions, and Tasks) . Compile a list of the milestones you need to meet, assumptions that are built into your business model, and the tasks you need to accomplish to create your organization.

Chapter 2: The Art of Positioning

With the right positioning, you should be able to see clearly why the organization was started, why it should be patronized by customers, and why good people should choose to work for the organization.

Before you begin dwelling into the art of positioning, you must first answer the question, “What do you do?” You must be able to provide an answer that not only seizes the high ground but shows exactly how your organization differs from its competitors. It is only then that you can communicate this powerful message to your chosen market.

Seize the High GroundGood positioning must have the following qualities:

Positive.

Customer-centric.

Empowering to your employees.

Self-explanatory.

Targets the intended customer.

Must show the core competencies of your organization.

Relevant to your core competencies and to the core needs of your customers.

Long-lasting.

Different from your competitors.

Other Positioning Tips:

Position your product or service in the most personal manner you can.

You must choose a remarkable name for your organization, product or service.

Use plain words that are easy to understand when describing what your company can do for your customers. Avoid technical or insider jargon.

Offer concrete points instead of mere overused adjectives when distinguishing your products to competitors. Instead of calling your system safe, say that your system has never been hacked.

nsure that each member of your organization understands your company’s positioning.

Chapter 3: The Art of Pitching

For an entrepreneur, pitching is almost as important as breathing. Not only is pitching a great tool for raising money, it is essential for reaching agreements. Needless to say, agreements are common to any entrepreneur’s daily life.

Here are some tips to help you make a perfect pitch:

Explain Yourself in the First Minute. Every single time you make your pitch, take in mind that your audience is waiting for you to answer one question: “What does your organization do?” The next time you make a pitch, make sure that you answer that question in the very first minute.

Answer the Little Man. Picture a little man sitting on your shoulder the next time you are giving a presentation. Imagine the little man whispering, “So what?” in your ear every time you make a point. Always answer the little man’s question. To make it even better, right after you answer the so-what question, move into “For instance…” and provide a real-world use or scenario.

Know Your Audience. Do your research before any meeting starts. Find out who you would be pitching to and learn what’s important to your audience. You must also visit the organization’s website and gather core information about the people you would be speaking to.

Observe the 10/20/30 Rule. Use the following the next time you are giving a presentation: ten slides, 20 minutes, 30-point font text. The 10 slides that are necessary for a pitch to investors are:

Title slide

Problem

Solution

Business model

Underlying magic

Marketing and sales

Competition

Management team

Financial projections and key metrics

Current status, accomplishments, timeline and use of funds

Set the Stage. Remember that everything and anything that goes wrong would be your fault. Therefore, you must be prepared. Make sure you bring your own projector and your own written materials. It might even be advisable to bring two laptops (both with your loaded presentation) and a memory card with a copy of your presentation just in case.

Let One Person do the Talking. In a pitch, it would be advisable for the CEO to do 80% of the talking. As for the rest of the team, one or two slides that pertain to their expertise are more than enough.

Pitch Constantly. The best way to achieve familiarity is to keep doing your pitch over and over again. Try out your pitch in front of your employees, relatives and friends.

Chapter 4: The Art of Writing a Business Plan

An entrepreneur will soon discover that a business plan is not really as important as most people deem it should be. However, the fact remains that most investors, recruits, potential board makers and decision makers expect a business plan and will not rest until they are given one.

Focus on the Executive Summary

When writing a business plan, use the ten slides that are necessary for a pitch to investors (previous chapter) and use them as your framework. Instead of a title slide, provide an executive summary. Remember that this executive summary is the most important part of your business plan.

An executive summary is a concise and clear description of the problem you wish to solve. It also states how you wish to solve the problem, your business model and the underlying magic of your product or service. Remember, your executive summary will determine whether or not people will read the rest of your business plan.

Keep It CleanHere are other tips you should use when creating your business plan:

Do not exceed twenty pages. The shorter your plan is, the more likely it is to be read.

Only one person should write the entire business plan.

Use staples to bind the plan. Forget about leather, embossed portfolios.

Simplify financial projections to two pages. After all, it is simply impossible to know how much you’ll spend on office items in your fourth year of operations.

Include key metrics. Remember, the number of customers you have, locations and resellers are important to your investors.

Provide the right numbers. Your cash flow statement for the first five years is very important.

Chapter 5: The Art of Bootstrapping

Most people are surprised to learn that industry giants Microsoft and eBay are two companies that started with a bootstrap model. A bootstrappable business model has:

Low up-front capital requirements.

Short (under a month) sales cycles.

Short (under a month) payment terms.

Recurring revenue.

Word of mouth advertising.

Bootstrapping might mean passing up profitable sales that may take a long time to collect or stretching your payments for everything you buy. This might mean a decline in “paper” profits but for a bootstrapper, paper profits are not as important as cash flow management.

Ship, Then Test

If you are bootstrapping, you obviously are not sitting on a pile of money. Therefore, it is imperative that you get your product or service to the market immediately. When using this philosophy, you are opting to fix the problems of your product later rather than now.

The good news is, with this method, you will receive immediate cash flow and feedback from the real world. Unfortunately, this method might also tarnish your image if there are quality problems.

It is not easy to make this decision. If you feel that you would allow the people you love to use the product or service as it is right now, then it might be correct to ship it. If you are running out of money, it might also be advisable to ship the product and deal with the consequences later.

Bootstrapping TipsHere are other things to consider when you are on a bootstrapper’s model:

Forget the “Proven” Team. When you’re bootstrapping you must almost always go for what’s affordable. Keep this in mind when you are choosing your team. Forget about hiring well-known industry veterans who would cost you an arm and a leg on wages alone. Instead, choose young inexperienced people with moldable talent and endless energy.

Focus on Function, Not Form. Do not focus on form when it comes to spending money. If you need proper accounting, you don’t need to hire a big name firm. You also don’t need to buy $700 office chairs when cheaper ones would do.

Go Direct. Take the opportunity to sell directly to your customers. Only use resellers once you have ensured that your product and service is bug-free. Remember, you have to establish your product on your own.

Position against the Leader. As a bootstrapper, positioning against the market leader or going against accepted ways of doing things might be the smartest thing to do.

Understaff and Outsource. Overstaffing can cause you a multitude of problems. It is better to understaff and outsource. Do not outsource research and development, marketing and sales. Instead, outsource your payroll management.

Build a Board. A board of directors is always a source of good guidance and superb direction. You don’t need to worry about your lack of capital to attract high-quality board members. If your products are innovative enough, the board members will come.

Sweat the Big stuff. Save on office space, furniture, computers, and office equipment. However, make sure you spend enough on product development, sales, billing and collection.

Execute. The failure to execute can be disastrous to a bootstrapper. To be able to execute, you must be able to:

Set and communicate goals.

Measure progress.

Establish a single point of accountability.

Reward the achievers.

Follow through until an issue is done or irrelevant.

Heed reality.

Establish a culture of execution.

Chapter 6: The Art of Recruiting

Recruiting good people is one of the most enjoyable and yet most critical tasks that you must face as an entrepreneur.

When recruiting, you must look beyond race, color, education and work experience. Instead you should focus on three factors:

Can the candidate do what you need?

Does the candidate believe in your meaning?

Does that candidate have the strengths you need?

Recruitment Tips:

Hire people better than you.

Remember that there are very few A players out there. Don’t make the mistake of disqualifying A prospects because of gender, race, sexual orientation or age.

Ignore the following factors: experience in a big, successful organization, experience in a failed organization, educational background, experience in the same industry, experience in the same function, and functional weakness. They are unimportant.

It is best to hire candidates who possess major strengths even if they have major weaknesses.

Chapter 7: The Art of Raising Capital

A start-up business is usually on a constant look-out for capital from outside investors. Investors include venture capitalists, foundations, friends and family members.

Although pitching plays a major role when you are trying to raise capital, the realities of your organization are so much more important. You must offer a product or service that is meaningful and long-lasting.

Here are some tips you can use when raising capital:

Build a Business. The best way to get investors is to build a business immediately. How do you build a business without money? Have a bootstrapper model.

Get an Intro. Have current investors, lawyers, accountants, other entrepreneurs and professors introduce you to investors. This way, they will learn about you from sources they respect.

Disclose Everything. Don’t attempt to hide problems that can not be cleaned up immediately. Do not allow anything to damage your credibility.

Acknowledge, or Create, an Enemy. Believe it or not, investors do not want to hear that your organization has no existing competitors. This only tells them that there is no existing market out there for your service, or that you are too stupid to use Google.

Don’t Use Old Lies. Here are some examples of lies start-ups tell investors. Refrain from using them and be prepared to come up with new ones:

“Our projection is conservative.”

“All we have to do is get 1 percent of the market.”

“P&G is too old to be a threat.”

“Several investors are already in due diligence.”

“Key employees will join as soon as we get funded.”

Chapter 8: The Art of Partnering

Partnerships - a word that is actually more complicated than it sounds. Although good partnering can increase cash flow, accelerate revenue and reduce costs, a bad partnership can very well mean the other way around.

Here are some tips that can help you master the art of partnering:

Partner for “Spreadsheet” Reasons. Partnering can accelerate your entry into a new area, open up new distribution channels, speed up product development and reduce your costs.

Define Deliverables and Objectives. These include additional revenues, reduced costs, new products and services, new customers, new markets, etc.

Ensure that the Middles and Bottoms Like the Deal. It is not enough that upper management believe that the partnership is a good idea. Make sure that the partnership is understood by all the members of the organization. Everyone must contribute to make a partnership work.

Find Internal Champions. Choose one person from each organization to become an internal champion. Ensure that the main goal of the chosen champions is to achieve success. Nothing but the partnership counts.

Cut Win-Win Deals. Both partners have to win. Do not enter into win-lose partnerships.

Wait to Legislate. Don’t ask for legal advice too early. Legal experts will always give you more reasons not to go through the deal. Agree on business terms on your own before you bring in your lawyers.

Put an “Out” Clause in the Deal. The assurance that both parties won’t be trapped into a partnership that is not working actually promotes longevity.

Chapter 9: The Art of Branding

The classic Ps of marketing (product, place, price and promotion) pretty much sums up the art of branding. Some people add prayer to the list, but the author prefers proselytization which is the art of converting others to your belief or doctrine.

For today’s start-ups, proselytization is the core of branding. You must be able to create something contagious that would make people enthusiastic and eager to try your product or service. You must be able to make other people spread the word around.

Create a ContagionThe secret to branding is aligning with a product or service that is already gold or enhancing your product and service until it becomes gold. You must be able to create or find products and services that are contagious. Contagious products and services are:

Cool.

Effective.

Distinctive.

Disruptive.

Emotive.

Deep.

Indulgent.

Supported.

Branding Tips

Lower the Barriers to Adoption. You have to make your product or service simple and yet effective. You must flatten the learning curve. Your customers must be able to get basic functionality right almost immediately.

Recruit Evangelists. Evangelists are people who believe in your company and what you do. Take advantage of the customers who wish to help you and your business. Assign them tasks and expect them to get done. Provide them the tools they need to evangelize.

Foster a Community. Identify and recruit customers who are enthusiastic about what you do. Hire someone whose sole task is to foster a community. Integrate the presence of your community in all your sales and marketing tools. Allow members to use your building for their events and conferences.

Achieve Humanness. Target the young and don’t be afraid to make fun of yourself. Feature your customers and help the underprivileged.

Focus on Publicity. To attract publicity, create something grand and get them into the hands of people. Make friends even with reporters from publications you have never heard of. Additionally, make sure you maintain good relations with the press all year round.

Chapter 10: The Art of Rainmaking

A rainmaker is a person who generates large quantities of business. The first step of rainmaking in a start-up business is to get the very first version of the product or service out to the market. After you do this, you must observe where your product or service will sell the most.

The second step of rainmaking is to be able to sell the product or service well. Remember, as a start-up, people are not aware of your products and services. You must overcome resistance.

Here are some tips you can use to master the art of rainmaking:

Pick the right lead generation method.

Find the key influencer. Ignore titles. They really don’t mean much.

Be nice to secretaries and administrative aids.

Make your prospect talks. This way, they’ll be able to tell you what you need to do to close the deal.

Ask customers to test drive your products and services.

Give your customers a slow and easy adoption curve.

Do not be fazed when you are rejected.

Chapter 11: The Art of Being a Mensch

Mensch is a Yiddish term for an ethical and admirable person. In some cultures, it is considered the highest form of praise. To be a mensh, you must help people, do what’s right and contribute to society.

Here are some tips on becoming a mensch:

Help people who can not help you back.

Observe the spirit of agreements, pay for what you get and focus on what is important.

The business literature over the years has been bombarded with a good number of paradigms—some rudimentary and others self-aggrandizing—that more often than not stringently tell management what to do in order to make progress. Though theories have by far aided leaders and corporate executives on their way to operational success, most books have not conscientiously explored and disentangled the complex process of execution.

It is at this point that Bob Prosen slots in his brilliant opus, Kiss Theory Good Bye, where he provides a clear-cut how-to and step-by-step instructions for obtaining unprecedented results in the organization. By utilizing proven tools and actions that, when appropriately employed, facilitate growth and profitability, the author propels companies to hit their targets and get ahead in the most practicable, trouble-free kind of way. This book is a ground-breaking book in that it allows the reader easy comprehension and application of the managerial mantra, Kiss Theory Good By. The book demonstrates that there is purpose in going back to the basics, and that which appeared all too trivial, will in fact work no matter at what stage the company finds itself in.

The Clutter that Conjecture Creates

Accepted wisdom is indeed a manager-traveller’s guide to the islands of competitive advantage and the mountains of profitability. But when there is too much of rigorous thinking, when there is a hefty framework of watertight philosophies, often managers/leaders shroud their natural instincts and miss the part where answers were emphatically under their noses. As a result, there is a glaring gap between vision and reality, or between mapping the journey and arriving at the destination.

The book deftly illustrates that what managers’ need are not byzantine schemas smothered with grand business plans that often take too long to achieve results. But rather, they need a pragmatic toolkit or a roadmap to guide them in carrying out their tactics and successfully achieving their financial and operating objectives. In a world that is constantly in a state of flux, what they need are straightforward answers that can be deployed without delay to augment their organization’s performance.

Consider the following queries as related in the book:

Does your company spend too much time planning and too little time executing those plans?

Are you frustrated because too many decisions end up on your desk?

Are you concerned about finding and retaining top talent?

Do you spend too much time following up to ensure things get done?

Do you want to increase accountability so you get the results you need?

Are you concerned about consistently meetings your operational and financial commitments?

Do you wonder whether your entire workforce is fully focused on meeting your organization’s top objectives?

Does your company use a defined process to reduce inefficiency and eliminate work?

Do you receive too much date instead of the information you need to make accurate, timely decisions?

If the answer to these questions is a resounding, “Yes!” then the book is the valuable way out, as it provides a way to pro-actively free an organization from the grips of stasis and the shackles of inefficiency.

One of the more compelling parts of the book is Prosen's identification of the "Five Crippling Habits" in any company that can delay or offset long-term sustainability and profits.

Five Crippling Habits that Attack from Within

1. Absence of Clear Directives

Sometimes, managers and leaders spend so much time giving so many directives, that none are clear and by the time they know it, their desks are inundated with a myriad responsibilities they can no longer commit to and that their staff, cannot either due to pressure and confusion from impulsively delegated tasks without prioritization. Prosen stressed that it doesn’t work this way: there cannot be too many goals with one shot no matter how powerful that shot is. In this scenario, employees are either misled or snowed under the bulk of work and as such, they can neither stay focused on the company’s most important objectives nor determine what must be accomplished first.

2. Lack of Accountability

Being able to differentiate between excuses and real problems is an essential part of management, according to Prosen. Managers must measure results against goals. Interestingly, Prosen states in the book that not only must employees be measured, but managers along with everyone else in the company, must be held accountable. Prosen stressed that being responsible to people, not for them is key in accountability. It is also just as important to be able to differentiate between excuses and real problems, to help remove any roadblocks to results.

3. Rationalizing Inferior Performance

Analyzing mistakes or flaws in any business process enables managers to continue to identify areas for improvement. In short, it affords them a sharper understanding of the operational trajectory, taking into account what must be retained, what must be improved, and what must undergo urgent metamorphosis.The author held that fashioning defensives, which substantiate inferior performance only plunge the organization into deeper malaise. It takes away time for quiet introspection of solutions and derails the organization’s momentum for picking itself up and going back on the race.

4. Planning in Lieu of Action

A lot of top business officials consume their precious resources on planning, hiring consultants whom they hope will anchor their organizations to soaring heights and skyrocketing productivity rates. Yet little do these managers/leaders know that delivery and execution matter more than the detailed reports and business sketches of how the organization ought to proceed. The plan is a systematic way of putting things in perspective, but business leaders cannot attain results where actions are lacking.

Prosen stressed that the most effective plans are those with specific measurable goals that can be easily evaluated on an ongoing monthly basis. He also advocates long-range plans covering three to five years as useful for setting and directing communication to senior management.

5. Aversion to Risk and Change

Very few managers are adept at affecting change as they themselves hardly ever embrace it with conviction. Often managers consume an enormous amount of time remaining in their comfort zones .A lot of organizations experience the low ebb of their business objectives primarily because their leaders do not possess the temerity to dare the different. They would more willingly navigate customary or familiar territory that had always assured them of the same (yet rather marginal) outcomes than try a newer or fresher approach that could have spelled a difference in profitability had they calculated the risks and overcome their trepidation.

Many leaders perceive the pain of change to be more damaging than the pain of maintaining the status quo. As an offshoot, companies are slow in trying to revolutionize themselves and when they do, it is often too late.

The Opposite Side of the Coin: Five Attributes of Highly Profitable Companies

Bob Prosen related that years of hands-on experience with and mentoring of companies and a number of non-profit organizations have enabled him to devise a practical and highly actionable set of behaviors for organizational success, which he dubbed as the Five Attributes of Highly Profitable Companies. These include:

1. Superior Leadership

This entails a relentless pursuit of vision and results. Superior leaders have exceptionally learned by heart, the intricacies of management. These leaders have resolute determination and an unassailable passion for outcomes. They strive to be unfailingly objective and know how to unravel truths. They recognize what their subordinates do and reward them accordingly. They think ahead, talk less, and act almost instantaneously on every malfunction.

Also, superior leaders are:

Instigators of Loyalty and Trust—they meet commitments with uncompromising integrity, delegate with confidence, and empower people to claim ownership of their outputs;

Employers of Smarter People—because their egos are firmly intact, superior leaders hire people smarter than them and recognize the power in building an outstanding team of diverse and talented individuals. They place the right people in the right positions so they never have to worry about recurrent tutoring that obviously disrupts progress;

Initiators of a Dynamic Corporate Culture—they emphasize professional ethics and morals and champion exemplary employee performance. They root out office politics that often trounces the spirit of teamwork and foster an atmosphere not of competition but of collaboration. They align the entire workforce to meet the organization’s top objectives and maintain a holistic view of the business. They “open their doors” and provide an avenue for open and compelling dialogue with their employees.

Master Communicators—they communicate and integrate objectives with clarity, honesty and candor. They have the ability to listen and engage in reflective thinking before making comments or criticisms. They articulate goals explicitly and do not confound their people with over-reaching concepts.

Does the company have the right top objectives supported by the entire senior management team?

Are you keeping people focused on achieving the company’s top objectives?

Are you managing people too closely?

Have you hired the right people?

Have you eliminated ineffective meetings and implemented conversation for action?

Have you made results visible, made people own their output, and utilized a system that rewards results not effort?

Are you helping people prioritize actions in alignment with the company’s most important objectives?

2. Sales Effectiveness

Sales effectiveness is the company’s lifeline. A vigorous revenue stream is one of the bare essentials a company must have power over for its survival. Since sales is one of the most objective aspects of business measurable by numbers, deteriorating sales performance may predictably signal the demise of functional operations. As such, managers/leaders must have the knack for constructing realistic forecasts that aid in consistently meeting the sales plan and its targets.

Creating a strong sales team is both a science and an art, combining systemic analysis with creative strategy. A winning line-up of sales people practices diligence in identifying the right profitable customers and in calculating their sense of urgency to buy.

By closely adhering to crucial sales metrics such as number of sales calls with decision makers, number of proposals delivered, number of signed contracts, and year-to-date revenue and margin comparisons with the sales plan, sales managers are able to establish accountabilities and robust quotas while maintaining ethical standards for their people. They prioritize the value of marketing, adroitly assess probabilities of success at different stages of the selling process and don’t clutter the pipeline with opportunities that have low prospects of a sure hit.

Does my sales team consistently meet or exceed revenue and margin goals?

Does my sales team focus on selling the company’s existing products and services and minimize one-offs?

Does my sales team enter accurate and timely sales data into the company’s reporting systems?

Does my sales team know the competition in-depth and how to attack it?

Do I involve senior management to help close important new business and pursue the business we can win?

Do I track products sold to ensure that the correct product mix and associated margins are being achieved?

Do I regularly check the accuracy of our pipeline forecast by comparing what was projected against what was closed?

3. Operational Excellence

One of the secret recipes for organizational success is the company’s exceptional capability to always be cost-efficient, which is done through continuous process improvement, forecasting performance, and isolating areas that negatively impact on cash flows. Managing costs is a balancing act and as such, it must be done with utmost rationality to ensure that all costs are unambiguously tied to the business plan. The major task is to know the company’s cost structure by periodically carrying out cost accounting. Cost accounting allows companies to grow its cost structure in the right proportion and focus its energies on winning.

In relation to this, Bob Prosen stressed that companies ought to invest in their financial accounting systems because markets and regulatory requirements change often even without their knowing. With an accounting system tailored to the business, managers can immediately adjust costs with confidence and remain competitive. An effective accounting system would enable a company to scale its growth, thereby increasing margins with revenue.

Reality Check #3: Does Your Operational Excellence Measure Up?

Does the company receive accurate and timely cost reports that promote effective decision-making?

Do we have a deep understanding of our competitors’ cost structure and can we respond quickly to changes?

Do we effectively manage employee productivity?

Do we have a defined process for eliminating rework and inefficiencies?

Are deviations from the costing plan analyzed and thereafter avoided?

Are we able to effectively manage projects within the time and budget allotted?

4. Financial Management

Financial management drives the company’s economic engine. It is according to Prosen, "about perspective—providing context for decisions, holistic solutions, alternatives, and ideas for positive change." Financial management also hubs on control and provides companies with the required checks and balances to understand and monitor fiscal performance.

The author enumerated some of the most decisive functions lodged under financial management. These include:

Acquisition authority—who can commit the company to purchase

Contract authority—who can sign for the company

Capital allocation—who decides where and when to make capital investments

Financial justification—how investments are approved

Audit process—when and how to verify that investments yield committed returns

Checks and balances—ensures that internal financial functions are separated adequately to avoid loss and embezzlement

Reality Check #4: Does Your Finance Team Measure Up?

In evaluating the competence of your fiscal experts, Prosen indicated that managers/leaders must ask if the finance team:

Proactively provides specific business recommendations to improve company profitability?

No company treads the failure curve when it devotedly champions customer service. Managers/leaders must not disregard the adage, “The customer is always right.” By applying this focus in an organization, a company pro-actively responds to the customer and therefore builds and maintains an atmosphere of customer loyalty. No matter what the issue with the customer, Prosen details the company's responsibility to meet the customer on his/her field and be responsive to their needs. The book advocates going above and beyond in all your efforts with meeting customer challenges or issues that might arise.

In this regard, Prosen argued that customer satisfaction surveys must be institutionalized to encourage constructive feedback and other customer responses. This greatly helps companies weigh up their product options and strategies. Prosen advocates to always exceed customer expectations. If there are product slip-ups, effective managers do not respond to customers with false promises but rather pro-actively tackle any issue with the bottom-line goal of customer loyalty and long-term satisfaction.

Customer Service Questions #5: Does Your Customer Service and Support Measure Up?

Do we consistently underpromise and overdeliver?

Do we resolve customer problems quickly?

Do we take all customer feedback seriously?

Do we have a mechanism to reduce problem recurrence?

Do we consistently measure customer loyalty and improve results?

Do we continually explain ongoing value to existing customers?

Do we have a clear and concise value proposition based on consumer demand?

Will all our customers continue buying from us and do they give us testimonials and references?

Do we hire sales and service people with the unyielding commitment to service?

Determine your competitive advantage—tap your intellectual capital and engage in valuation processes. Know what you know and how much you know of it.

Assess if you’ve hired the right people for the right position—do away with impetuous recruitment. The candidates track record and what she/he knows matter more than whom she/he knows

Anticipate and Analyze Risks—scan the competitive playing field. Has it been levelled? Are you in the zone or lagging behind? What could possibly result from one of your competitors’ moves? Do you have a contingency plan?

Do not linger on plans—once a plan is concocted, do not hang around. Execute right off the bat and secure it with the appropriate budget and individual objectives.

Establish an accountability-based culture—make people feel important by recognizing their own niche in the corporate world and giving them full reign of their outputs. Slot in due dates and progress meetings and be hard on outcomes, not on people.

Discard damaging political behaviour—practice open debate followed by agreement, not compromise. Curtail the building of turfs and internal boundaries.

Communicate effectively—clarify information, talk in person, and open your doors. Free your ideas and encourage criticisms from subordinates. People know what is important because you tell them directly and unambiguously. Think before speaking. Know the little people. Coach patiently.

Measure what matters most—complacency must be ruled out. Focus on the critical few, not the important many. Measures are only the means to results. Craft objective metrics designed to monitor your own progress/performance.

Hold your ground and never let it go—never pull away from your mission. Sustain your sovereignty with transparency and unparalleled responsibility. Be fair. Never provoke incitement and never give in to its challenge. Protect your stance by finding and seeing yourself in others and setting good examples.

Bob Prosen accentuated that companies would do well by doing good—following these commandments and finding purpose and meaning in their work. Profitability can be directly linked to overcoming the crippling habits and applying the attributes of superior leadership. The book is a manual for all business leaders or entrepreneurs who want to succeed long-term in growing their business and exceeding their initial expectations.

Companies and businesses share the common challenge of retaining and getting the most out of their employees. When trained employees resign, the company loses a lot of productivity and incurs additional training and recruiting expenses.

Author Captain D. Michael Abrashoff teaches you how to motivate your employees to take responsibility for their actions. Through this book, you will learn how to improve your leadership skills and inspire your employees.

1 - Take Command

A challenge for every organization is to attract, retain and motivate employees. If a company succeeds in doing so, employees work with more passion, energy, and enthusiasm. This translates to an increase in productivity and more profit for the company.

Reasons for Leaving

Research indicates that low pay or salary is only the fifth on the list of reasons why employees change jobs.

The top four reasons are:

Not being treated with respect or dignity.

Prevented from making an impact on the organization.

Not being listened to.

Not being rewarded with more responsibility.

Encourage and Respect Your Staff

The key to a successful organization is to be able to look through the eyes of the staff and crew.

You must assume that everyone wants to do well. It is then important that you give your employees the space and confidence they need to do their jobs. Do not just bark out orders and expect them to follow. Give everyone the trust and respect they deserve.

Also remember that taking command does not mean shouting out orders. Leadership focuses on encouraging people not only to find better ways to do their jobs, but also to enjoy their work. This is the only way to implement lasting change.

A leader should not only know how to lead, he must also know how to follow. He must be open to suggestions and be ready to listen to new ideas. Furthermore, a leader should make the effort to get to know the people around him. This creates a positive atmosphere that can motivate, encourage and give confidence.

A leader's "job" is to create a climate that enables employees to unleash their potential. If you give your people the right tools and the right environment, they can achieve wonders.

2 - Lead by Example

Real leadership must be done by example. Remember that the people below you follow your lead and that you have an enormous influence on your employees. They will look up to you for signals on how to behave and what the organization expects from them.

As a result, the signals that you send are very essential to the organization. If your staff sees that you failed to implement a policy, they will deduce that they can do the same thing. At the same time, if you are seen doing things that are good for the company (such as being open to new ideas, techniques, etc.), then your employees will follow suit.

Never Forget Your Effect on People

As a leader, you need to understand that you can greatly affect people. In fact, you directly you set the tone and spirit at the workplace. You must realize the huge influence you have and use it wisely.

How your employees perceive work is based on the things you do and what you say. The signals you send tell people how important they are to you and how important the company is.

If you are an enthusiastic leader, you will have an enthusiastic work force. Make an extra effort to minimize the danger you impose when you have bad days. Recognize your mood swings and learn to manage them.

Be Accountable for Your Actions

A good leader knows when to stand up and be accountable for his mistakes. If your crew sees that you take responsibility for your actions, they too will follow suit. It is far more beneficial to make sure that a mistake never happens again, than to find someone else to put the blame on.

Listen Aggressively

A great leader is universally loved and admired not only by his peers but also his staff. One of the factors to being a great leader is that he must listen to people. If someone approaches you, give him your full, undivided attention. Doing so tells the person that you respect him and that he is important.

Your tone of voice and choice of words also affect how people perceive you and what you represent. The power of your language affects the morale of your crew.

One of the most important things to remember is that you must learn to back your words with actions. Mean whatever you say, and practice what you preach. Furthermore, repeat positive words and phrases. This will encourage the people around you to believe in themselves.

3 - Communicate Purpose and Meaning

The secret to a successful management of any organization is to be able to articulate a common goal that inspires people to work hard together. Proper, effective and open communication of goals, rules, instructions and expectations can spell a difference.

The more people know what your goals are, the better results you can achieve. Silence, lies and arrogance creates an atmosphere that poisons creativity and productivity.

Effective Communication is Key

Understand that no matter how great your message is, if no one is receiving it, you are not communicating. You must have a strong grasp of all manner of communication. Even more important, you must be willing to use. If this is not done, your message will not be conveyed.

Freedom Creates Discipline

Give your people the freedom to speak up. If they fear that you will shoot down their suggestions or that you are not open to criticisms, they will be afraid to give you their suggestions or point out mistakes and problems that can prove to be costly to your organization.

Empower your crew to take action and to think and act on their own. Teach them that they should not afraid to speak up.

It is equally important that you have a follow-up process after every major decision or event to analyze how things went. Find out if the event was a success or failure.

Such feedback is necessary to keep the company moving forward, as well as to assess how the group works together and what can be improved. This way, a mistake is never made twice and everyone involved gets to see the big picture.

4 - Create a Climate of Trust

The best way for an organization to succeed is to give the employees all the responsibility they can handle and then stand back. Trusting your employees to do their job well sustains the company.

Trust is also a social contract - you have to earn it. Trust is earned when you give it. When people start trusting each other more and more, they stop questioning motives and start to work as one unit.

Give Second Chances

You should be aware that people are sensitive to your actions and reactions. If they see that you are the type of leader that gives up on someone easily, they will think that there is no room for redemption. If they see you, however intervene to help someone who is worth the effort, they will be reassured.

If people feel more secure, they are more willing to take risks. After all, they trust that you will support them. Trusting your employees gives them a positive attitude about the organization.

Delegate

Delegating means that your employees are trusted and respected. Create a climate of trust so strong that your employees will not be afraid to deliver bad news. Give them the opportunity to solve the problem early on. This will not only save you and your company time and money, it also gives your employees confidence and a positive attitude about the company.

5 - Look for Results not Salutes

Encourage the people in your organization to be more result-oriented by opening their minds to new ideas. Encourage them to use their imagination to find new ways of doing things. Your employees must learn how to take the initiative.

Let Your Crew Feel Free to Speak Up

People who always say "yes" or agree with the higher-ups or top executives all the time are dangerous to the organization. These employees tend to mask problems until it is too late to solve it.

Create a culture where your staff is comfortable enough to say what is wrong or suggest reforms when they feel that something can be improved. A climate to question decisions is one way of double-checking.

Great leaders are not afraid of criticisms and are open to the ideas and opinion of his staff. Make your people feel that they can speak freely and that you respect them. If you do this, you will earn their loyalty, trust and respect.

6 - Take Calculated Risks

Below are some risks that you can bet on:

Bet on people who think for themselves. By taking a "leap of faith" and trusting that one person can do the job and do it right, you increase his self-confidence and make him do his job even better.

Take a chance on a promising sailor. Give people second chances especially if you see potential in him. He might just surprise you with outstanding results.

If a rule doesn't make sense, break it carefully. Remember, there is always room for improvement but think ideas thoroughly before implementing it.

7 - Go Beyond Standard Procedure

In any business, standard operating procedure (SOP) is the rule. It is safe, proven and effective. However, SOP seldom gets outstanding results and distracts people from what is really important.

Innovation and progress are realized when you go beyond standard operating procedures. Sometimes, you have to look for new ways to handle old tasks and find new approaches to new problems.

"Pushing the envelope" for innovation and originality has the following benefits:

You keep your priorities in focus.

You stay ahead of the competition

You get to see another "point of view"

You motivate people to do what you want them to do and to do their best.

8 - Build Up Your People

Good leaders strengthen their organization by building their people and helping them feel good about themselves and their jobs. When this happens, morale and productivity is improved which translates to increased profit for the company.

Focus on building self-esteem. Show them that you trust and believe in them. Praise them for a job well done.

You can also follow this strategy when dealing with your boss. Never tear them down. Anticipate what they need even before they know that they need it. Remember, if you make them look good, your department looks good too. By boosting their ego, you create a positive atmosphere in the organization.

Meet and Talk to Your People

Walk around. Meet and talk to your staff. Not only will you know more about your organization and the people who run it, you also boost their morale.

Positive and personal reinforcement is the key to an effective and successful leader. Thank your employees for the hard work they put in and you will be surprised that they will work even harder.

Little gestures such as these make a big difference to the employees. They feel appreciated.

Expect the Best from Your Crew and You Will Get It

Leaders should understand and appreciate their crew as individuals. Provide them access to proper training to grow in their chosen field.

Communicate expectations and feedback frequently throughout the year. This way, you will minimize people's surprise when you give them their final evaluation. This also keeps them on their toes throughout the year.

9 - Generate Unity

Unity is essential to any organization. If you don't support each other, the organization will soon encounter critical problems that may be irreparable.

The job of a leader is to assemble the best team possible, train the unit, and figure out the best way to get the members to work together for the good of the organization.

You can achieve this goal by making people want to belong to the organization. Treat them fairly and with dignity. Show them that you value them as individuals no matter what color, sex or religion they may have.

Respect, Dignity and Fairness

Treating people with respect, dignity and equality leaves little room for jealousy. Jealousy and envy can create serious problems. As a leader, you must watch out for it and try to minimize or totally eradicate it. Make people who work for you feel needed, trusted and highly valued.

Deal out punishment strictly but fairly. Try to listen to all sides of the story. Do not jump to conclusions. Give out punishment that is equal to the mistake or misdeed committed.

To achieve unity, you must recognize common interests. Maximize the individual's uniqueness and focus on their commonality. Channel these values or characters toward the common goal of the organization.

Representation at the Top

The management needs to reflect the makeup of the work force. People in your organization need to know that their interests are being represented at the top.

If they know that management values them and their contribution, they will be loyal and give their best to the organization.

10 - Improve Your People's Quality of Life

People who enjoy and look forward to going to work are more productive and happy.

Fun at Work Makes for a Happy Organization

You can create a positive atmosphere at work by letting people have fun and interact with their colleagues. Having fun at work creates more social glue for the organization. This results in productivity and loyalty.

Have a "fun" day at least once a month. Make this a day where top level management and staff can interact with one another. You can get some positive feedback and ideas from this interaction.